January 25, 2012

The Guy Who Fires You

Randy Lavallee is a proud member of the American working class. A New Hampshire resident, he works as a calibration inspector for a jet-engine plant just across the state line in Maine. Four years ago, the plant went through a downsizing that resulted in the layoffs of one-sixth of its 1,600 workers. After the cuts, Lavallee told me, the “CEO and management got big bonuses.”

I met Lavallee, 58, recently in Rochester, New Hampshire, where he lives. A registered Democrat who sometimes votes Republican in presidential races, he is exactly the kind of swing voter who will decide this November’s election. Moreover, given his recent workplace experience, he is exactly the kind of voter who should be receptive to attacks on Mitt Romney’s business history—namely, the layoffs he presided over at Bain Capital. So what, I wondered, did Lavallee think of Romney’s business record? When I asked, he just laughed. “I’d like to have his success,” he said. “I’m just not as ambitious as he is.” But what about the layoffs that followed many of Bain’s deals, even as Romney and his colleagues made big profits? “That’s just how business works. Would I like it if my business shut down? No. But that’s what businesses sometimes need to do.”

A few days later, I called Lavallee back and pressed further, but he held firm. “He’s a businessman, and, if I was a businessman, that’s what I’d do. I’d be in business to make money for me and my company,” he said. I was curious if he knew what Romney’s business involved. “Just from watching TV, it looks like his company would purchase other companies that were going bankrupt, reorganize them, get rid of what’s not needed, and keep the good part of the business,” he replied. But what about when the businesses failed and Bain made money anyway? “They did make an investment and had to recoup the money they could,” he said. If Romney didn’t snare profits like that for himself, Lavallee said sympathetically, he “wouldn’t be in business. He’d be working in a factory like me.”

Again and again on the campaign trail in recent weeks, I spoke to voters whose positive attitudes toward Romney’s wealth and business background surprised me—people who had every reason to resent his success but in fact were inclined to celebrate it. In Council Bluffs, Iowa, I met Dan Strietback, 32, a manager at a Panera café, who told me that, while he knew Bain had laid off plenty of workers, he saw the economic model it was part of as “the best method for the United States of America.” “Everyone’s going to fail now and then,” he said. “It’s when you pick yourself up and carry on.” But what about the sheer scale of Romney’s wealth? “I look at Romney as someone who got some help from his family but worked his butt off for it,” he told me. “It makes me want to work hard, too, and maybe get some money for myself, too.”

Then there was Anne Field of Concord, New Hampshire, a Barack Obama voter who is planning on switching to Romney in November. Field, 64, told me that business has been pretty good at the small plumbing firm where both she and her husband work and that, in any case, she did not blame Obama for the slow recovery. But she is worried about her retirement savings and her daughter’s difficulty finding a job, and she thinks Romney’s business experience is well-suited to a moment when “we need to be tough” and “cut things.” When I asked what she made of the less appealing side of Bain’s work, she shrugged. “That’s what his business was,” she said. “More power to him.”

As the campaign has unfolded, I’ve kept returning to these conversations in my mind. For weeks now, Newt Gingrich has been hammering Romney for having presided over leveraged buyouts at Bain. And, while it remains to be seen whether Gingrich can sustain the momentum from his South Carolina upset, it’s already clear that Obama’s reelection strategy will pursue a similar tack, assuming Romney eventually wins the nomination. The president, it appears, will seek to portray Romney as a plutocrat who made tens of millions of dollars by slicing and dicing companies, regardless of the collateral damage—depicting him, in Mike Huckabee’s memorable 2008 description of his then-rival, as “the guy who fires you.” Obama political guru David Axelrod recently provided a preview of this strategy when he told CNN: “Saving an industry, as the president did, is different than strip-mining companies in order to—in order to profit off of them, which is, in many cases, what Mr. Romney did. ... The question is: Is that the philosophy that you want in the White House?”

Among Beltway liberals, there is currently an unquestioned assumption that these attacks will work in the general election: that Romney’s wealth and business background are indeed major political liabilities. But talking to people like Lavallee, Strietback, and Field made me wonder: Would such attacks really stick? Is it actually possible to win an election by portraying your opponent as a plutocrat? Or will many American voters respond to Romney’s financial success with a simple shrug?

AMERICANS are of famously mixed minds when it comes to matters of wealth and fairness. We venerate economic freedom and the self-made man, yet we also harbor populist suspicions of wealthy elites and big business. In a volatile time, our ambivalence on this point has remained remarkably steady: A Pew study released in early January that found a sharp increase in the perception of class conflict also found that respondents had barely budged from four years earlier on the question of whether the rich “are wealthy mainly because they know the right people or were born into wealthy families” or “mainly because of their own hard work, ambition or education.” Forty-six percent chose the former, 43 percent the latter. “What this adds up to, to me, is a public that’s paying attention to these issues and is cross-pressured on these issues,” says Pew’s Paul Taylor. “There is some part of the American public that loves the free enterprise system and believes that the ability to get rich is part of the American Dream, and there is a part of the American public that cares about issues of fairness and that believes that, when things gets out of whack, it’s time to say, ‘Whoa, that’s too much.’”

Research on Americans’ instincts about money and class has mostly been left to social psychologists; but political scientists have started branching into this area, hoping to better understand how wealth and class inform voting. Recently, Meredith Sadin, a doctoral candidate in politics at Princeton, set out to try to gauge how voters respond to candidates’ class backgrounds. She asked voters to rate some imagined congressional candidates, each of whom had been assigned different origins (son of a factory worker or son of a surgeon) and different adult backgrounds (works as an ambulance driver or works as a cardiologist). Not surprisingly, she found that Democratic voters were more likely than Republican voters to attribute negative characteristics to a GOP candidate’s privileged origins or current upper-class status. But her most interesting finding was that independents—those crucial voters who invariably seem to determine the outcome in close races—tended to act like Republicans when it came to candidates’ origins and current wealth.

Both independents and Republicans, for instance, perceived a GOP candidate with current upper-class status as slightly more intelligent than a Republican of unknown status. Independents and Republicans also did not seem to hold an upper-class candidate’s wealthy origins against him. That is, if they knew both the origins and current status of a Republican or Democratic candidate, they didn’t see many differences between one who’d worked his way up and one who’d been born rich—whereas Democratic voters strongly favored one who’d climbed the ladder.

There was one caveat to this last finding: When independents were only given information about a Republican candidate’s origins, and not current class, they felt more warmly toward a candidate with humble roots. But presidential elections are “high information”—voters learn a lot about the candidates—and, in the upcoming general election, voters will know both where the candidates started and where they ended up.

Sadin’s findings sound like good news for Romney, since they suggest that independent voters aren’t all that inclined to punish a candidate for being wealthy and may even prefer him on these grounds. But does it matter if a candidate made his money by buying up and restructuring other companies? Sadin deliberately did not give her imagined candidates a business background, knowing that this brought in a whole layer of voter biases on top of their notions of class. Mark Smith at the University of Washington has spent years looking at voters’ perceptions of politics and business. His overriding conclusion? “Being very rich by itself is not an advantage, but it’s not a disadvantage, either. It gets you in the game, it gets you noticed. But, if you turn out to be a bad candidate, it doesn’t guarantee you anything.” Here again, good news for Romney.

BUT, BEFORE Democrats conclude that there is nothing to be gained from portraying Romney as a plutocrat, consider the research being conducted by John Sides, a George Washington University political scientist. Sides has been doing surveys on Romney’s and Obama’s wealth and on perceptions of whom the candidates “care about.” Many of the findings are pretty intuitive: Nearly three-quarters of respondents in an early January survey thought that Romney was “personally wealthy,” while fewer than half said so of Obama. And, among independents, 84 percent thought that “cares about the wealthy” described Romney, while only 64 percent described Obama this way. But Sides also found some things that weren’t necessarily intuitive. For one, voters who saw Romney as caring about the wealthy were less likely to think he cares about other groups (“middle class,” “poor,” “people like me”), whereas people who saw Obama as caring about the wealthy were actually more likely to see him as caring about other groups. Moreover, Sides found a far higher correlation for Romney than for Obama between voters’ perception of a candidate’s personal wealth and their belief that the candidate cares about the rich.

Why would voters react this way? The obvious explanation is that Romney’s wealth is accentuating some unflattering stereotypes about Republicans. “To my mind, what is problematic about Bain for Romney is that it seems to be consistent with preexisting ideas about this candidate ... and the Republican Party,” Sides explains. “You’re not asking voters to entertain a counterintuitive idea when you’re talking about his business experience or when you’re talking about him being more interested in protecting business or the wealthy as opposed to the middle class or the little guy. And, if a message is going to be effective, it has to persuade [voters] of something they already think they know.”

That was exactly what Democrats did 18 years ago, when Romney ran for the Senate in Massachusetts against Ted Kennedy. Romney had pulled even in the polls in September, when Kennedy campaign advisers Bob Shrum and Tad Devine began what Devine recently described to me as an elaborate, multistage process to undermine Romney’s image. First, they ran ads pointing out that Romney had made “a lot of money” during the previous two years--$11 million. Then the campaign started talking about the fact that even employees at the companies considered Bain successes were often temp and part-time workers with low wages and no health benefits. Then came the story of a company whose jobs Bain had sent from Massachusetts to Texas. Then came an examination of Bain itself, noting that 23 of its top 24 people were men. (“His kind of damning quote was that there were not a lot of women who were qualified enough,” Devine recalls.) Then the Kennedy team started bringing in relevant platform contrasts, noting that Romney was against raising the minimum wage. Says Devine, “It was $11 million for himself but $4.25 for working people.”

Then came the final move: devastating ads shot with workers from a company in Marion, Indiana—SCM Office Supplies—that had suffered layoffs after being taken over by Bain-owned American Pad & Paper (AmPad). “We had a camera guy, a sound guy, and a producer, and we drove for an hour and a half through the corn fields to get to Marion,” Devine recalls. “Shrum and I had written teleprompter scripts for the workers. But, when I got there and talked to them for five minutes, it became clear to me that these scripts were a complete waste of time. I told the teleprompter guy that this would be the easiest day of work in his life—here’s your check, now you can leave.” The only instruction was that, if the workers were going to refer to Romney or anyone else, they should use his name, not “he.” And that was all that was needed. “The very first question I would ask just set them off. All you had to do is ask that question and the floodgates opened for everybody.” One by one, they told their version of how Bain had come in the previous July and laid everyone off, before rehiring 75 percent of them, typically the younger and healthier ones. (“It was social Darwinism: The weak went by the wayside,” Devine says.) He took the tape back to a video editor in Philadelphia, and “we locked ourselves in a room for two days.” The result was a string of indictments from people who exuded authenticity. Some of the workers came to Massachusetts to campaign for Kennedy, who ended up winning by 17 points.

The AmPad story was effective, Devine says, “because we put it in context.” While he’s not sure whether such a maneuver would have quite as much impact today—“America’s gone through the worst economic downturn since the Great Depression, and, as a result, people aren’t nearly as shocked by stories of job loss as they were in 1994”—he argues that, if it’s going to work at all, it needs to be part of a broader narrative about what has gone wrong in the country. “If you can convince [voters] that Republicans want a return to failed economic policies and the guy you’re running against is part of the problem,” he says, “you can hurt [Romney] badly.”

AT SOME LEVEL, the various studies plus the experience of 1994 add up to a muddled picture. Clearly, there are reasons to believe that attacks on a candidate’s wealth won’t work and reasons to think that such a strategy can succeed. Still, it is possible to draw some broad, albeit tentative, conclusions. One lesson is that these attacks may be most likely to work if they are linked to a broader ideological critique of the candidate’s platform. Another is simply that an attack on a candidate’s business background or wealth has to be well-crafted and savvy. Just being told that a politician is wealthy or that he fired people during his years in business isn’t, contra the hopes of many liberals, going to be enough to turn off most voters. Yet this does not mean voters will refuse to register specific, persuasive arguments about a candidate’s background.

Given all this, it’s worth noting that, among the voters I spoke to, even some of those inclined to give Romney a pass for his business background came up short on one issue: taxes. It was wrong, they said, that Romney had paid no more than 15 percent on his fortune, thanks to the lower rates for capital gains and private-equity income. “That does bother me. Everyone should have to pay their fair share,” Field said. Echoed Lavallee: “That bothers me, because I think that people that earn more ... should pay the taxes just like you and I would have to do.”

This fits with polling data. Shortly before releasing its survey showing the sharp split on Americans’ view of wealth, Pew released another one showing that Americans’ biggest complaint about the tax system is not how much they themselves pay—only 11 percent cited that—but rather the fact that the wealthy don’t “pay their fair share,” cited by 57 percent. And it was Romney’s equivocating about releasing his tax returns that, more than anything, was offered to me by Republican voters in South Carolina as a reason for not supporting him. Even if they were not exercised about the rate he was paying, they were bothered by his presumption that it was nobody’s business.

Perhaps, then, taxes offer a targeted issue where the Obama campaign could align its personal critique of Romney with its ideological one. What remains to be seen is whether it is possible to go further: to portray the outsized gains at Bain as symptoms of an economic system that has gone seriously awry. “What it’s going to take,” Devine says, “is for people to find out the difference between traditional investment banking ... and leveraged buyout firms, which are really not there to create jobs and companies; they’re there to create profit.” But are voters capable of grasping such distinctions? “After $250 million in ads, yes, they are,” he says. We’ll find out.

Alec MacGillis is a senior editor for The New Republic. This article appeared in the February 16, 2012 issue of the magazine.